Good to Great: Principles from the Book Which We Apply in 90 Digital

I’ve copied out most of the good to great summary from Wikisummaries and added my comments to the main points within the book. If you haven’t read good to great, I urge you to do so. What makes this book stand out is that it’s based on number crunching and interpretation of data, rather than just some random hypothesis based on some sort of interesting new management idea. For that reason it’s timeless and amazingly relevant.

The idea behind this post is for you to hopefully be aware of an awesome book, and to see how we have applied these concepts to 90 Digital.

Chapter 1: Good is the Enemy of Great

The first chapter of the book lays out the criteria that Collins and his research team used in selecting the companies that served as the basis of the meta-analysis that provided the findings set forth in the book. The most important factor in the selection process was a period of growth and sustained success that far outpaced the market or industry average. Based on the stated criteria, the companies that were selected for inclusion were Abbott, Fannie Mae, Circuit City, Gillette, Kimberly-Clark, Kroger, Nucor, Philip Morris, Pitney Bowes,Walgreens, and Wells Fargo.

Collins also offers a few of the most significant findings gleaned from the study. Of particular note are the many indications that factors such as CEO compensation, technology, mergers and acquisitions, and change management initiatives played relatively minor roles in fostering the Good to Great process. Instead, Collins found that successes in three main areas, which he terms disciplined people, disciplined thought, and disciplined action, were likely the most significant factors in determining a company’s ability to achieve greatness.

Nick’s Thoughts

Discipline is such an important concept within our business. We have something like 90 people within the business, of which 64 are office-based and the rest are distributed workforce. We find that great smart creatives are the most hard to employ because they are most in demand and therefore have more choices than any of the others in the business. To get around this problem we’ve built out a strong recruitment team to find people who are naturally disciplined in thought and action.

Our greatest benefit to these smart creatives is lifestyle choice, where they can live where they want to and depending on where they are earn far more than locals would. For anyone who takes a key role in our business they must be self-motivated disciplined people who can deliver results without being harangued by a manager.

Chapter 2: Level 5 Leadership

In this chapter, Collins begins the process of identifying and further explicating the unique factors and variables that differentiate good and great companies. One of the most significant differences, he asserts, is the quality and nature of leadership in the firm. Collins goes on to identify “Level 5 leadership” as a common characteristic of the great companies assessed in the study. This type of leadership forms the top level of a 5-level hierarchy that ranges from merely competent supervision to strategic executive decision-making.

By further studying the behaviors and attitudes of so-called Level 5 leaders, Collins found that many of those classified in this group displayed an unusual mix of intense determination and profound humility. These leaders often have a long-term personal sense of investment in the company and its success, often cultivated through a career-spanning climb up the company’s ranks. The personal ego and individual financial gain are not as important as the long-term benefit of the team and the company to true Level 5 leaders. As such, Collins asserts that the much-touted trend of bringing in a celebrity CEO to turn around a flailing firm is usually not conducive to fostering the transition from Good to Great.

Nick’s Thoughts

Level 5 leadership touches on so many things beyond humility and an intense determination to succeed. It also touches on whose team the leader is really on. There’s a very good book called five dysfunctions of a team and it examines how groups of people who are supposed to be teams often aren’t. If a business has a leader whose only team is themselves then it’s will corrupt the integrity of that business, if the leader falls over.

For that reason as the founder of 90 Digital, I’ve done my best to lead where I am most useful and otherwise just get out of the way. My mission as founder is to constantly reinforce the strength of our systems and processes so that it can be strong without me. This is why I resigned as CEO of the business last year because I knew that Aferdita Pacrami would do a much better job than me at running the business and this has been proven.

Chapter 3: First Who, Then What

The next factor that Collins identifies as part of the Good to Great process is the nature of the leadership team. Specifically, Collins advances the concept that the process of securing high-quality, high-talent individuals with Level 5 leadership abilities must be undertaken before an overarching strategy can be developed. With the right people in the right positions, Collins contends that many of the management problems that plague companies and sap valuable resources will automatically dissipate. As such, he argues, firms seeking to make the Good to Great transition may find it worthwhile to expend extra energy and time on personnel searches and decision-making.

Collins also underscores the importance of maintaining rigorousness in all personnel decisions. He recommends moving potentially failing employees and managers to new positions, but not hesitating to remove personnel who are not actively contributing. He also recommends that hiring should be delayed until an absolutely suitable candidate has been identified. Hewing to both of these guidelines, Collins claims, will likely save time, effort, and resources in the long-term.

Nick’s Thoughts

I’ve learnt over the years that business is fundamentally about people and making the right decisions to create value in the marketplace. The wrong people on board can quickly destroy the momentum and the team spirit that businesses need to succeed. This is especially the case in agency models, where were ultimately renting out time from people with skills that are in demand.

Because people are that important, we’ve taken the very unusual step of building out our talent scouting team to 3 people. This means we are way over capacity on finding new people for various roles we have. The upside is that we have an amazing roster of really good people working with us or potentially able to work with us if we need them.

In my role as founder the most important thing I can do is make sure we have processes in place to only allow the best people in, the sad part is that we say no to an awful lot of applicants. But for you as a client at least you know that to become a 90’er means that person has been very carefully selected and has gone through a rigourous recruitment process.

Chapter 4: Confront the Brutal Facts (Yet Never Lose Faith)

Another key element of some companies’ unique ability to make the transition from Good to Great is the willingness to identify and assess defining facts in the company and in the larger business environment. In today’s market, trends in consumer preferences are constantly changing, and the inability to keep apace with these changes often results in company failure. Using the example of an extended comparative analysis of Kroger and A & P, Collins observes that Kroger recognized the trend towards modernization in the grocery industry and adjusted its business model accordingly, although doing so required a complete transformation of the company and its stores. A & P, on the other hand, resisted large-scale change, and thus guaranteed its own demise.

Build red flag mechanisms that turn information into information that cannot be ignored.

Nick’s Thoughts

The underlying driver with these four points, is that everyone is in it together as a team and the social contract of trust between each other, is the glue which holds the business together. It’s one of the reasons we have deliberately avoided having managers with no direct accountability to projects within the business. We’ve all seen it where managers don’t really do a great job, but have enough power to hang on in there and kill everything around them slowly.

Confronting the brutal facts, is why we have a management accountant, whose job it is to go through all our figures on every project to understand how everybody is performing. This means total transparency with everybody in the company when it comes to who is doing what and how successful they’re being. In summary, information free flow means that we can see problems coming up a long way out and deal with them before they turn into something serious.

Chapter 5: The Hedgehog Concept (Simplicity Within the Three Circles)

In this chapter, Collins uses the metaphor of the hedgehog to illustrate the seemingly contradictory principle that simplicity can sometimes lead to greatness. When confronted by predators, the hedgehog’s simple but surprisingly effective response is to roll up into a ball. While other predators, such as the fox, may be impressively clever, few can devise a strategy that is effective enough to overcome the hedgehog’s simple, repetitive response.

Similarly, Collins asserts, the way to make the transformation from Good to Great is often not doing many things well, but instead, doing one thing better than anyone else in the world. It may take time to identify the single function that will be a particular firm’s “hedgehog concept,” but those who do successfully identify it are often rewarded with singular success. In order to help expedite this process, Collins suggests using the following three criteria: 1) Determine what you can be best in the world at and what you cannot be best in the world at; 2) Determine what drives your economic engine; and 3) Determine what you are deeply passionate about.

Nick’s Thoughts

This idea of sticking to your core competence is something we take very seriously. Whilst it is tempting to adventure off into unknown territory. Having the internal processes and information free flow, means we really focus in on what’s working best.

A good example is Digital PR. The foundations of part of Digital PR were interested in sit with search engine optimisation. Why? Because Google is the most influential website there is, it’s where people ask questions and many of those questions are about products and brands and whether they check out well. Digital PR, or at least the flavour were interested in focuses on presenting the right answers to those really important consideration questions on behalf of brands

Another good example is how we’ve integrated web development within our offering because again, collectively we have enormous depth of experience in delivering successful websites and ongoing marketing activity to support them.

Our next migration is towards online media relations, where we can affect consideration, brand and reputation through a combination of search engine optimisation and digital PR.

What constantly steers us, is knowing the core of what we do best and working out where the demand is. To keep us along these lines we constantly confront the brutal facts that helps sense check everyone within the business.

Chapter 6: A Culture of Discipline

Another defining characteristic of the companies that Collins defined as great in his study was an overarching organizational culture of discipline. He is quick to point out that a culture of discipline is not to be confused with a strict authoritarian environment; instead, Collins is referring to an organization in which each manager and staff member is driven by an unrelenting inner sense of determination. In this type of organization, each individual functions as an entrepreneur, with a deeply rooted personal investment in both their own work and the company’s success.

Although this discipline will manifest itself in a high standard of quality in the work that is produced by managers and employees alike, its most significant outcome will be an almost fanatical devotion to the objectives outlined in the “hedgehog concept” exercises. Disciplined workers will be better equipped to hew to these goals with a single-minded intensity that, according to Collins, will foster the transformation from merely Good to Great. In addition, the author asserts, it is important that within this overarching culture of discipline, every team member is afforded the degree of personal empowerment and latitude that is necessary to ensure that they will be able to go to unheard-of extremes to bring the firm’s envisioned objectives into existence.

Nick’s Thoughts

The book, Good to great makes a huge point around discipline. As said above, there’s a massive difference between authoritarian discipline and self motivated people who are disciplined.

In today’s employment marketplace, if you’re a knowledge worker, then your performance is down to your inner resourcefulness. As you will know, if you’re a factory worker on a process line then you’re bound to productivity requirements because the factory process says so. These kinds of people don’t need as much internal discipline because discipline is imposed upon them.

For the best and brightest within our business, the ‘smart creatives‘, internal discipline is absolutely critical for us to deliver the results our clients have been promised. What we found is that only 20% of the people we interview, really have this kind of internal discipline to nail results constantly. So our recruitment process has become very centred on giving people projects which are open-ended to see how they cope.

If you get enough disciplined people within an organisation and you have enough information free flow so everyone understands how the business is performing, you end up with a very disciplined business. This is really the core of 90 Digital’s strategy, find very disciplined people, create a tight framework for them and let them do their magic.

Chapter 7: Technology Accelerators

Today, many businesses have come to depend upon technology to increase efficiency, reduce overhead, and maximize competitive advantage. However, Collins cautions that technology should not be regarded as a potential panacea for all that ails a company. The folly of this kind of thinking was revealed in the aftermath of the crash of the tech bubble in the early 2000s. The market correction threw into sharp relief the differences between sustainable uses of the Internet to extend established businesses and ill-planned, unviable online start-ups.

Collins contends that the good-to-great companies approach the prospect of new and emerging technologies with the same prudence and careful deliberation that characterizes all of their other business decisions. Further, these companies tend to apply technology in a manner that is reflective of their “hedgehog concepts” — typically by selecting and focusing solely upon the development of a few technologies that are fundamentally compatible with their established strengths and objectives. Collins characterizes the ideal approach to technology with the following cycle: “Pause — Think — Crawl — Walk — Run.”

Nick’s Thoughts

90 Digital exists because of a transformative event called the Internet. When we started the business, we decided to look at technology as objectively as possible. One rule that we have constantly followed with technology, is that anyone, anywhere can get online and be productive. This has driven us towards using ‘cloud’ for everything. If you don’t know what ‘cloud’ means, have a look at this link.

As a result, we have a really efficient distributed workforce, because there is no requirement for physically centralising people’s activities around offices and internal networks.

Learning from one’s mistakes… Recently we had a situation where we made a big bet on a big idea for a technology project, the project was executed but there was no internal marketplace for it because processes had moved on and this particular project became obsolete.

It’s a very good example of what happens in businesses everywhere, where people buy into a grand scheme that ultimately fails. This recent experience has been unbelievably useful to us. From now on we are not going to build on a big promise. Things will always start small and will iteratively develop as we go. This is also how we work with our clients, because everyone likes to start gently and build into things.

Chapter 8: The Flywheel and the Doom Loop

In this chapter, Collins describes two cycles that demonstrate the way that business decisions tend to accumulate incrementally in either an advantageous or a disadvantageous manner. Both, the author emphasizes, accrue over time. Despite the popular misperception that business success or failure often occurs suddenly, Collins asserts that it more typically occurs over the course of years, and that both only transpire after sufficient positive or negative momentum has been accrued.

Collins describes the advantageous business cycle that, in some cases, can foster the transition from Good to Great as “the flywheel effect.” By making decisions and taking actions that reinforce and affirm the company’s “hedgehog” competencies, executives initiate positive momentum. This, in turn, results in the accumulation of tangible positive outcomes, which serve to energize and earn the investment and loyalty of the staff. This revitalization of the team serves to further build momentum. If the cycle continues to repeat in this manner, the transition from Good to Great is likely to transpire. In contrast, the doom loop is characterized by reactive decision-making, an overextension into too many diverse areas of concentration, following short-lived trends, frequent changes in leadership and personnel, loss of morale, and disappointing results.

Nick’s Thoughts

I love the analogy of the flywheel, it’s such an easy one to visualise and therefore has power. As the book rightly says momentum either positive or negative is generally built on large numbers of small decisions accumulating over time. It means that it’s the small things that count most, which is why we have so much emphasis on information free flow within the company so we all know what successful looks like. This in turn helps people to make better decisions on projects they’re working on, which in turn aggregates and makes the whole business successful.

As mentioned before, having the right people on board, is also one of those ongoing critical things, which drives decisions being made and therefore the positive or negative momentum within the business.

Whilst I feel we are building momentum, that’s no reason for any complacency whatsoever. Perhaps in five years time when we have that much more experience as a business, I’ll be able to relax a little. However talking to my peers, it never really works that way. Being vigilant and constantly working on building momentum seems to be a perpetual cycle.

Chapter 9: From Good to Great to Built to Last

In the concluding chapter of Good to Great, Collins makes a connection between this book and his previous work, Built to Last, which represented the findings of a six-year study into the factors that determined whether a new company would survive in the long-term. First and foremost, Collins contends that companies need a set of core values in order to achieve the kind of long-term, sustainable success that may lead to greatness. Companies need to exist for a higher purpose than mere profit generation in order to transcend the category of merely good. According to Collins, this purpose does not have to be specific — even if the shared values that compel the company toward success are as open-ended as being the best at what they do and achieving excellence consistently, that may be sufficient as long as the team members are equally dedicated to the same set of values.

Although many of the conclusions of both of the books overlap, Collins notes that Good to Great should not be seen as the follow-up to Built to Last, which focuses on sustaining success in the long-term. Instead, Good to Great actually functions as the prequel to Built to Last. First, a company should focus on developing the foundation that is necessary to work toward greatness. Then, they can begin to apply the principles of longevity that are set forth in Built to Last.

Nick’s Thoughts

Being built to last is a core objective of the business. Over time we have built up a strong team identity, where everyone knows they’re part of something special. We describe ourselves as 90’ers, and therefore as smart creatives who are self disciplined, driven to succeed, committed to promises made, open to the brutal facts and constantly work to make better and better decisions everyday.

When it comes to higher purpose, it is to make the Internet a better place. However you look at this mission, it makes sense to both us and our clients. If we can help make the Internet a better place for our clients, it means they have a better experience with our clients, in one way or the other which ultimately leads to more business.

Being focused on making the Internet a better place also means when it comes to strategic decisions being made, we will always steer towards doing things which ultimately helps people and their experience with the Internet.

Finally, if you’ve got this far, well done. It’s a long read. I hope this gives you some insight into an amazing book; Good to great